I hope they can get this through... The Link Congressman Poe Cosponsors Bill Supporting Auto Dealers Legislation Would Restore Franchise Law Rights to Auto Dealers Washington, Jun 10 - Congressman Ted Poe (TX-02) announces today that he is cosponsoring the Automobile Dealer Economic Restoration Act. This legislation reinstates auto dealer franchise agreements prior to the bankruptcies of Chrysler and General Motors. “Small businesses are the backbone of our economy,” said Poe. “Our local car dealers not only employ thousands of people and generate millions of dollars in tax revenue, but they are also part of our communities – most locally owned and operated for generations. “Many of the dealerships have remained profitable despite Chrysler’s and GM’s bankruptcies,” continued Poe. “This legislation will stop the arbitrary closure of dealerships and reinstate franchise agreements set forth by state franchise laws.” H.R. 2743, The Automobile Dealer Economic Rights Restoration Act: Restores the protections of state motor vehicle franchise laws to General Motors and Chrysler dealers as they existed prior to each company's bankruptcies Preserves General Motors and Chrysler car dealers' rights to recourse under state law At the request of an automobile dealer, requires General Motors and Chrysler to reinstate franchise agreements in effect prior to each company's bankruptcies Makes clear that the legislation is not intended to void the court-ordered transfer of assets from Chrysler to New CarCo or the transfer of General Motors assets that could be approved by a court after the introduction of the Act.
Oh, if only we didn't have to live in the real world! Then there'd be enough to go around for everyone! Look, this situation sucks, and GM/Ford/Chrysler created it. But there are too many dealerships, and while the automotive manufacturing industry is (in the fullest possible sense) a strategic national asset, having too many dealerships is not. In the name of shareholder value we have shipped the majority of our production capacity to Asia. What that means isn't just that factories in our country shut down, and factories in Asia were built. It means that equipment, whole industries were unbolted from the floor and shipped in pieces to another country. Don't you think that impacts our capacity, not just in terms of economic production but national defense? I hate this, but we're well past the chicago school vs whoever, free trade vs protectionism, socialism vs capitalism discussion. We are now at the point where if we lose the Auto industries, we have little left in terms of production capital to build on. Sorry dealers.
“Many of the dealerships have remained profitable despite Chrysler’s and GM’s bankruptcies,” continued Poe. “This legislation will stop the arbitrary closure of dealerships and reinstate franchise agreements set forth by state franchise laws.”
Bozo, Please explain how closing profitable dealerships saves the auto industry. If Dealership "A" is profitable, they are selling cars. They are employing people. If Dealership "B" is failing, it will close. How does closing Dealership "A" benefit anyone but dealership "B"? Why close "good" to save "bad"? If you can explain this in a way that changes my mind, I will banish myself from these boards forever. I swear to God. Thanks in advance.
IRC, Just because a dealership is profitable doesn't make it profitable to the auto manufacturer. They have a lot of businesses with which they generate revenue that do not benefit - and sometimes compete directly against - the manufacturer. Fact of the matter is that most of the dealers I worked with when I was in that business were not profitable at all in sales, but made up for it and then some on the service drive. And if they're using aftermarket stuff on their customer pay, the dealer is essentially only losing money there because they're only getting warranty work. If they're being closed in violation of contract, that's one thing. But the fact is that if it's in the company's best interest to remove a franchise, they ought to be able to do that. I don't buy that we can force a business to keep losing money in a relationship just because it sustains the other party. If they can show that the dealer staying open doesn't actually cost the manufacture, that's one thing, but I think we all know that if that were the case, and there really was no detrimental effects on the manufacturer, then the franchises wouldn't be shut down to begin with.
So now the free marketers want to establish the rich automobile dealers welfare act? I didn't know we all had the basic constitutional right to own an automobile dealership. Where's mine?
I thought you free market GOP types didn't agree with legislation telling private business what to do. That's what this bill does, so why are you for it?
The key word is "restoration". This is exactly what the bill is trying to do is keep the government out of private businesses. Don't try to pretend that GM and Chrysler are private businesses anymore. The dealerships are private businesses. The manufacturers are now government entities. Like Joe Biden said, it shoulb be all about that 3-letter word: J O B S The dealers employ a lot of people.
Oilfield, not necessarily fewer warranty claims - although it might actually cut down on some of the minor trim-oriented stuff that someone is less likely to drive across town to perform. What it means is less market saturation, less competition for business between dealers, less inventory required on hand so manufacturers can cut production more easily, less expense in shipping parts, vehicles and materials to multiple locations, less personnel needed to handle dealer issues... I could go on.
I thought you free market GOP types didn't agree with legislation telling private business what to do. huh?
Help me to understand your position. You don't like the government taking control of the auto companies, but you are all for government intervention when it is to dictate who the auto comapnaies have to franchise with?
These guys bought and paid for the franchises. Nowhere do I see that anyone has claimed they have not lived up to the franchise agreements. They are selling cars; (if not, they will fail of their own volition). They employ hundreds or thousands of people. GM should be thrilled to death to sell them as many cars as they can resell. GM will not turn profitable by selling fewer cars, at least not in the long term. As for government intervention, the government is already abrogating their contracts. They referenced legislative action is written to stop the government action. The elephant in the room is that this was all a politically motivated "redistribution of wealth", and while I have yet to see absolute proof, it certainly smells suspicious. I know some of you have no problem with sticking it to what are presumably rich, white men, but yes, that is unconstitutional. I'm guessing that this is exactly the Hope and Change you wanted. Am I right?
prodigal- lets be clear. they don't "close" dealerships, although they would often close when the maker pulls the franchise and the financial support. The reason why manufacturers don't do it (and in fact spent years denying that it was a problem, including the article I posted) is because of the negative impact on their brand image and the view of the distribution channel as real estate, in other words that every franchise they pull as a shelf where one of the other big three could put products.
Correct, bozo, I didn't word that properly. Theoretically, they could just convert over to a used car center, although they wouldn't be able to sustain their service departments without warranty work and factory support - at least not to the extent they run them now.
I don't know. My understanding is that the service centers keep the certs. BUT that's going to be a dwindling biz, since they won't be selling the new cars anymore.
I'm not a bankruptcy lawyer but when a company files they have the right to accept or reject contracts and I would expect that franchise agreements fall into this bucket. They may have to pay some money to reject a contract but they can do it if they want to do it. This bill seems to try to come in and rewrite bankruptcy law. I don't like it when the government does it on one side of the deal (if that's what happened in the Chrysler case with the secured debt holders) and don't like it here, either.
I guess what is hard for me to understand is the rush to close them. But, everything else has been rushed through so....
The economic model under which the auto industry has been run has proven to be unsuccesful and unsustainable at this point in time. Why would you want to pass legislation ( and yes, that is the government) saying that the economic model that is failing must be perpetuated?
Good point, Murphy. Why did they keep the UAW agreements pretty much in tact? Clearly that is a failed model.
